Personal finance, career building, freedom, investing, corporate-dom and the IT industry geek.
My personal adventures in hacking life.

March 24, 2008

Cut the overhead. Sleep better. How I pay $50 a year in mobile phone bills.

I've met corporate workers with no time,a frenzied schedule of things to do and a life on schedule. I've also met unemployed people with bucket loads of time, but nothing to do. So it's a a conundrum, how can you work, afford the things you want and have the time to do what you want? It's simple, if a little audacious:

Do what you want, as work.

It seems crazy, there are bills to pay, and the work you want might never pay the bills. The phone, the car, the mortgage, the credit card, the vet, the doctor, the this, the that,the,the, the.the list goes on.

I don't disagree at all. Money is a concern, but how much is enough? a lot less than most people think, but you need to think first. Most people go to work, then spend what they earn. I propose a better solution. Work out how much you need to spend (and invest), then go and earn it. It doesn't matter whether or not you love your work, because once you reach enough, the rest is a bonus, and buys you freedom of choice. You work on your terms, terms of what you do, where you do it, how you do it and when.

It's not about ascetism. I'm ambitious about my financial goals. It's about doing what you need, even if it's not that great to meet the necessities, then having the time, energy and resources to focus on the important. This is different for each person, everyone has unique dreams of building a business, spending half the year surfing, travelling the world, spending time loving and nurturing children and family or giving time to charity. I've seen too many people drained, with great financial resources but so much overhead that they ran out of energy to live, be healthy, be loving, be good people, let alone dream.

Well here is another audacious idea. Cut the overhead. AKA cut the crap. I recently spoke to Anthony Herro of Herro Solicitors in Sydney, and he said the single biggest factor of struggle in small businesses is overhead.

Here is how I've gone to a minimum overhead life, and these rules apply as much to business as they apply to life.

Say no to fixed costs. In business, fixed costs are the devil, they are unavoidable costs that come whether or not your business is making money. These become an expectation of your income.For businesses, these are things like rent, for people, these are the cable TV bills, the 24 month mobile phone plans and the devil of all fixed costs, personal loans (cars, holidays, whatever.) These are the bills that enslave you to work to continue servicing them. Ouch.

Say yes to variable costs. In business, variable costs are those that change with your level of revenue. These are things like raw materials and utility bills. Personally these are things like charges per use and buying outright. No financial ties. Not using it? Don't pay for it. It's dodging the monthly repayment contracts for the internet, phones, cars and any other expenses.

In reality, it's difficult to always kill off all fixed costs and move to variable costs, but you can reduce them. Here are ways:

Maximise your pay per use services. Pay by the call and you'll start using your mobile less (contrary to popular belief, you don't need to call every missed call back or reply to every single sms). I've gone to $50 a year prepaid mobile service, and I use Skype and VOIP for my calls. I pay less for calls, and I only pay what I use. It's scalable to use.

Fixed cost is the whip that send you to work, there will always be a minimal amount, and it's different for each person (rental, mortgage, food, hygiene, etc.) Variable cost is the stuff you can say no to unless you use it.